FSC orders Intertrade to lock down business
Published:Wednesday | May 25, 2011 | 12:00 AM
The Financial Services Commission (FSC) has ordered securities and fund management company Intertrade Finance Corporation not to undertake any new business, and its subsidiary Intertrade Investments to stop conducting securities trading.
The regulators made the cease-and-desist order on the ground that both companies were in breach of the Securities Act.
The order, made last Friday, has also been imposed on board members and senior managers of the companies, including its chairman, Dr Gavin Chen, chief executive officer Joan Powell, vice-president for treasury and operations, Leroy Paul, and directors Herbert Phillips and Dr Courtney Haughton.
Contacted Tuesday, the management of Intertrade Finance and Intertrade Investments relayed a message to say they did not wish to comment at this time.
The companies' lawyer, Lord Anthony Gifford, also declined to comment, saying he was taking instructions from his client.
In a release, the FSC said the cease-and-desist order was issued against Intertrade Finance Corporation based on its failure to comply with Section 38 of the Securities Act, by misrepresenting to clients the nature of the securities in which their funds were invested.
In addition, the FSC said, the company failed to pay over sums to certain clients pursuant to their instructions.
possible misrepresentation
Based on a review of interim financial statements and other documents relating to its financial position, including documents submitted by the company's clients and which were made available at the time of an investigation, "the licensee may have misrepresented to the FSC the total funds under management, as well as the corresponding liabilities as per section 6(4)(b) of the Financial Services Commission Act," said the regulator.
"The FSC has concern for the licensee's liquidity, cash flow and capital and the safety and soundness of its operations and financial condition, as well as for the protection of the licensee's clients," the release said.
desist order
The cease-and-desist order demanded that Intertrade Finance Corporation as well as Powell, Malcolm, Chen and Phillips immediately restrict the operations of the company as a licensed securities dealer, particularly as it relates to new business.
The order against the subsidiary, Intertrade Investments, was made on grounds that on a day-to-day basis the company carried on the business of dealing in securities other than World DigiBeat Bonds, but those other securities have not been registered with the FSC and so contravened Section 7 of the Securities Act.
According to the FSC, directors of Intertrade Investments, namely, Powell, Paul and Haughton, have made representations to the company's clients that their funds may be invested in Government of Jamaica bonds and promissory notes. It said the company "was at all material times engaging in securities business without being licensed by the FSC to do so".
As a result, the FSC issued the order against the company and three directors to stop conducting securities business.